The latest figures from Rightmove have revealed that the usual buoyancy associated with the spring housing market has failed to materialise this time round largely due to Brexit.
According to Rightmove data, the average price of property coming to market was up by just 0.4% this month - equating to +£1,287. The subdued start to the traditionally busy spring period saw the lowest average monthly rise at this time of year since 2011. Prices outside the capital faired a little better with nine out of 11 regions seeing new-to-the- market sellers pricing higher.
Miles Shipside, Rightmove director and housing market analyst comments: “While March marks the start of spring, temperatures have yet to rise in the housing market. Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate. There’s greater resilience the further away you get from the London market, and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.”
London continues to be the main drag as nine out of 11 regions still see new-to-the- market sellers pricing higher than a month ago. Prices in London are down by 1.1% on the previous month, and the other region to record a monthly fall is the North East, down by 1.3%. Their respective pricing histories are very different however, with London prices still 68% higher than ten years ago and buyers looking for prices to settle at a new level of fair value. In contrast, the North East has seen new seller asking prices up by just 8% in the same time-span.
Shipside notes: “London and some of its commuter belt are suffering from a post-boom hangover, with prices now having to be far more sober to attract buyer interest. In contrast, North East prices never had the opportunity to become intoxicated by the capital city’s heady mix of high demand, low interest rates and higher salaries.”
As the clock ticks down towards the Brexit deadline it is natural human behaviour for more buyers to hesitate. The number of sales agreed by estate agents in February was 7% below the same period in 2018, compared with a year-on-year fall of 4% recorded in January.
However, search activity on Rightmove remains steady, with the number of visits to the website staying level in the year-to-date. This indicates that home-movers are keeping a watching brief which could lead to an eventual bounce if and when the uncertainty abates.
Shipside adds: “The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see rather than acting now. This could be a temporary pause, and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly. Markets and people do not like uncertainty, though while sales agreed numbers are down by 7%, that means they are still running at 93% of last year’s levels. Most potential buyers are getting on with their lives or seeing a price lull as an opportunity to get onto the housing ladder or move to the next rung, with average national asking prices being 0.8% cheaper than a year ago.”
Brian Murphy, Head of Lending for Mortgage Advice Bureau comments: “The latest report from Rightmove highlights what we’ve been seeing on the ground for some time, which is that whilst the market in London and the South East remains subdued, in other regions of the UK the momentum continues with buyers transacting in reasonable numbers despite the current political and economic climate. Movers are supported in no small part by some of the most competitive mortgage rates we’ve seen for some time, with many lenders reaching the end of their financial year and therefore releasing headline rates in order to attract new business onto the books.
The fact that Rightmove has reported their traffic levels have remained steady over the past month entirely isn’t surprising; we would suggest that the pent-up demand in many areas, probably due as much to a lack of available homes for sale restricting choice as hesitancy due to the lack of clarity around Brexit, is likely to mean that those buyers who’ve held off moving are now deciding to take the plunge.
Indeed, we’ve seen substantial numbers of prospective buyers working with our network in order to get their Agreement In Principle in place over the past few weeks, indicating that market confidence is still very much in evidence, regardless of ongoing debate at Westminster about our departure from the EU.”
Marc von Grundherr, Director of Benham and Reeves, commented: “It would seem that the London market continues to see the price expectations of its home sellers reduce on an on-going basis as a result of wider political and economic influences.
This is most prevalent across the inner boroughs of the capital where prices have spiked previously and so any adjustment, Brexit induced or otherwise, is always going to be fairly drastic.
However, with the news that a no deal Brexit is now off the table, we have seen strong interest from both domestic buyers and investors across Shanghai, Hong Kong Singapore and Kuala Lumpur in the last few days. Should this persist we could see the pulse of the London market strengthen as the year goes on.
Ironically, Rightmove’s figures suggest that the Westminster property market has taken the brunt of the London decline and while MPs have been voting against the prime minister, they’ve seen £62,000 wiped from the value of their second homes.
At least the financial hurdle of the capital’s first-time buyers has reduced, and this will be warmly welcomed regardless of the overall state of the market.”
Alastair McKee, Managing Director of One77 Mortgages, commented: “We’re still far from out of the woods where Brexit is concerned and we will continue to see asking prices adjust to more natural levels to account for this. However, while they may be some way of historic peaks, three consecutive months of positive growth suggest that a degree of confidence is returning to the market.
When you couple this with the fact the average time to sell has also dropped it suggests momentum is beginning to build for the year ahead. This is almost definitely a knock-on result from the uplift in buyer demand registered already this year and as this demand grows, asking prices will continue to follow suit.”
Andy Soloman, founder and CEO of Yomdel, commented: “While Brexit continues to stick in the throat of the UK property market it's clear that the further you move from the shambolic epicentre of Westminster, the less it phases UK buyers and sellers.
The property market in Westminster is on its knees but in contrast, the North West and Scotland are positively on fire. The Midlands, Wales and Yorkshire are also more than holding their own and thankfully the fragmented nature of our property landscape means these frontrunners are holding the proverbial head of the UK market above water.
We expect that this will continue to be the case with no real signs of life returning to London and the South East until a deal is done and an exit is made. Which is unlikely to be any time in the near future.”
Tom De Ville, Director at Fine and Country Nottinghamshire, says: “The wheels are still turning in the housing market but they’re turning more slowly than this time last year as there’s hesitation from both buyers and sellers. A more certain political outcome would help to reassure those currently hesitating and would help to get the wheels turning more quickly again, and it would also help boost much-needed supply. Houses that are priced sensibly are still selling but there are some sellers who haven’t realised that there’s been a shift in power from a sellers’ market to a buyers’ market.”
Guy Gittins, Managing Director of Chestertons, says: “It was almost inevitable that the uncertainty of Brexit would drag property prices down in the short term, especially as the date gets closer and many buyers take a ‘wait-and-see approach’. However, we have experienced an incredibly busy start to the year, with a sharp increase in buyer registrations, viewings and offers throughout January and February, which reflects pent- up demand and suggests that prices are now at a level that buyers are comfortable buying. I therefore see this month’s drop as a temporary blip, and expect prices to recover once the market has more clarity on Brexit. Over the medium-and long-term, London property has outperformed most other asset classes and we believe it will remain a solid investment, regardless of the Brexit outcome.”